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My homestead is in Minnesota. Recently we have been 6 months…

My homestead is in Minnesota...
My homestead is in Minnesota. Recently we have been 6 months in Florida so applied for Florida residency for tax benefits. We live in a home there which in is the name of my new wife of 2 years. My business in Minnesota has used about $75,000 from my personal credit cards plus about $175,000 from an equity line on my home in Minnesota. Now the business in struggling, can't get financing, has stopped paying the credit cards, stoppped paying me my retirement income, but still paying the equity payments for now. If I file bankruptcy how much of my assets would be protected? Minnesota home? Car? Stock Investments? IRAs? Savings and checking accounts? Furniture? What would I have to give up? Would a Chapter 11 be better than a Chapter 7. Any other reccomendations?
thank you,
Harold Vogel ***@******.***
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Answered in 8 minutes by:
7/14/2010
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
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Hi JACustomer,
Is there a first and/or second mortgage on your home in addition to the equity line of credit?
If so, what are the balances of these mortgages, and what is the market value of your home?
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Customer reply replied 7 years ago

My first mortgage is paid off. The first equity line is about $158,000 with Wells Fargo, formerly Wachovia. The second equity line is about $90,000 with a local bank, Sherburne State Bank. Also, I have personally guaranteed the mortgage on the failing business, about $800,000 balance with Frandsen Bank & Trust in Foley, MN.

I am trying to sell my home and is listed at $389,000. In todays market there are no lookers, although our agent says our price is very competitive. We might have to drastically discount it to get it sold.

Since the house is worth more than the loans that the house secures, filing a Bankruptcy would not save the home, as it can be foreclosed on if the loans are not being paid.
Additionally, filing a Bankruptcy means that most of your assets would have to be turned over to the Bankruptcy court to be distributed to creditors.
The assets that you would be able to keep are a car worth up to $4200/$3225, clothing and household furnishings up to $9300/10775, wildcard for any property $0/$1075, where the first dollar amount is the Minnesota exemption and the second dollar amount is the federal exemption (the debtor chooses which exemption set to apply).
IRA's are exempt, so you would be able to keep the IRA's. Bank accounts and stocks would be protected only up to $1075 with federal exemptions, and not protected at all with Minnesota exemptions.
Chapter 7 is preferred because besides the property that has to be surrendered to the court, nothing further has to be paid to creditors. With a Chapter 13, the debtor has to pay all disposable income to the Bankruptcy court for 3 - 5 years.
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
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Customer reply replied 7 years ago
We thought homesteads were exempt in Minnesota and other states. So is that totally false thinking?
Thank you for accepting my answer!
When a homestead is exempt, this means the Bankrutpcy court cannot take it, but does not mean the mortgage company cannot take it.
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Customer reply replied 7 years ago

Most of the furniture in our house belongs to my wife, since she sold her home in Iowa and moved all her things here. Is there a problem under bankruptcy in protecting her furniture and assets, since she is not filing bankrutpcy?

Harold Vogel

If she is not filing, none of her property or possessions can be taken by the court, and would not even be considered, as you are asked to list only the property and assets that you own either separately (from before you were married), or jointly (mainly that which was obtained during the marriage).
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Customer reply replied 7 years ago

What problems might I have with the $75,000 in credit cards?

Since I personally guaranteed the factory mortgage at about $800,000, what rights will they have to what of my assets and how might they try to collect?

Since I have no first mortgage, just two equity lines, can these creditors foreclose or just file liens?

Thank you,

Harold Vogel

Creditors - including credit card companies - have the same rights to assets as the Bankruptcy court, minus the state exemptions (not the federal ones).
The equity line creditors can - and probably will - foreclose on the Minnesota home. The fact that there is no first mortgage just makes it easier for them to do this.
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
Verified
cfortunato and 87 other Bankruptcy Law Specialists are ready to help you
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cfortunato
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Category: Bankruptcy Law
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